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ERP Selection Etiquette: Guidelines for Requesting ERP Vendor References

Thursday, January 24th, 2013 by admin

Customer reference calls and a site visit to see an ERP vendor’s customer using a proposed ERP solution in a real-world environment is a logical and essential step in the ERP selection process. That said, organizations that are evaluating distribution and manufacturing software solutions need to consider when in the overall selection process to ask the ERP vendor for such references. Following these two simple guidelines will not only help an ERP selection team find the best possible ERP system for their respective business, they will help the selection team make the most effective and efficient use of its and the ERP vendor’s customer’s time.

1.    Complete the vast majority of the ERP selection project first, including remote demonstrations, an RFI, an RFP, and onsite scripted software demonstrations, before moving into customer reference calls and a site visit.

ERP selection teams should make every effort to complete other phases of the selection project before worrying too much about speaking to an ERP vendor’s existing customers. Selection teams should conduct a thorough, quantitative assessment of each potential ERP vendor and solution through distributing RFI’s and RFP’s, participating in initial web demonstrations with potential vendors, and bringing a short-list of vendors in to perform a day-long, scripted software demonstration. Through distribution of an RFI and RFP, a perfectly logical request would be for the software vendor to provide some sample customer names who are in a similar industry and/or who have similar internal processes and software requirements. Through onsite, scripted software demonstrations, the ERP selection team should be able to narrow their short list of potential vendors and solutions down to one (or two at the very most) preferred vendor of choice. Done right, the scripted software demonstration process should provide the selection team with a clear-cut, quantitative ranking of the various software vendors and ERP solutions being evaluated.

Requesting customer references with only the preferred vendor or top two vendors will minimize the number of reference calls made by the selection team and prevent the team from calling customers of ERP vendors who have already been eliminated from the evaluation project due to functional fit.

2.    Avoid cold-calling; allow the ERP company to arrange dates and times for customer reference calls based on their customers’ and the selection team’s availability.

Following scripted software demonstrations and identification of the preferred ERP software vendor, the selection team should request the vendor to arrange dates and times with three of its customers who are similar in size, industry, and functional requirements. The selection team should also request the vendor to arrange the calls with customer contacts who have an intimate knowledge of the proposed ERP solution and vendor, the software selection process that was used when evaluating the vendor, and who will be able to discuss his or her experiences with the ERP software implementation process and working with the software vendor.

Calling ERP vendors’ customers without having the vendor first arrange the date and time of the call with the right contact will prove to be largely ineffective. Not only does the selection team run the risk of a given customer contact not being available, it risks speaking to somebody who may not be able to answer the full scope of the selection team’s questions relating to the ERP vendor, the software, the selection process, and/or the implementation process.

Customer reference calls are, without doubt, essential elements to the overall evaluation process. It is important, however, for the selection team to make the most effective use of its time to keep the selection process moving forward and request customer reference call arrangements to be made at the most logical time in the process.

ERP Selection: Comparing Enterprise 21 ERP to the Competition

Tuesday, May 29th, 2012 by admin

A common question asked during the ERP evaluation process is, “How does your ERP system compare to other ERP solutions on the market?” The problem with such a question, unfortunately, is that it is typically being posed to a sales person representing a specific ERP application, making it virtually impossible for the person evaluating the ERP system to get a truly objective, unbiased response.

One of our primary business objectives at TGI is to encourage our new business prospects to compare TGI and our Enterprise 21 ERP system to our competition through a quantitative ERP selection process. We do not believe in “selling” software in the traditional sense of the word; rather, we believe in demonstrating Enterprise 21 ERP and being straightforward about what its functional capabilities are. In many cases, this means we have a strong functional fit for a given business. In other cases, however, we may not be the best fit, in which case it is better for both TGI and the prospect to part ways. No ERP software solution can be everything to everybody.

Over the years, we have attempted to provide the necessary tools to allow companies to select the ERP vendor and solution that has the best functional and organizational fit for their respective businesses. One example of this is our free ERP Software Selection Tool Kit, which has been downloaded by thousands of organizations and used to evaluate potential ERP, distribution, and manufacturing software systems.

In continuing with this approach, we are pleased to announce that businesses interested in evaluating Enterprise 21 ERP can obtain a free ERP comparison report based on user-defined functional criteria using Technology Evaluation Centers’ (TEC) online ERP comparison tool. Users may select up to three additional ERP vendors, enter their requirements, and get an immediate, detailed report comparing Enterprise 21 to the other selected ERP solutions.

To get your free ERP comparison report from TEC, please click here.

When Should I Replace My Existing ERP Software?

Tuesday, July 6th, 2010 by admin

Let’s examine when it’s time to consider kicking off an ERP selection project replacing your existing manufacturing or distribution ERP software. There can be a number of symptoms that will help point someone to realize it’s time to evaluate and implement new ERP software. Here are some examples.

  • Current software can’t match existing business processes – this may have existed from day 1 of installing your new software if you did a poor job of selecting software the first time, and the gap may have continued to widen over time.
  • The business is changing and software can’t enable this change – as a business changes and grows, new processes can get introduced which help enable that business to be competitive in new markets with new customers.
  • Lots of off-line processing (i.e., spreadsheets, manual processes, re-keying of data multiple times) – if the existing system doesn’t allow someone to get their job done, they will tend to find ways around the system to do so. Unfortunately, these inefficiencies can eat substantial amounts of time and can create data inaccuracies as the “same” information is entered multiple times in disparate systems.
  • Have lots of “data” but can’t get “information” out of the system – analyzing information is critical to continuous improvement and attracting and maintaining good customer relationships. One can get handcuffed by having a data rich, information poor environment where they put data into their system but can’t get any information back out.
  • Can’t easily implement new functionality or technology (i.e., RF/barcode, EDI, warehouse management system, CRM software, etc.) – there may be improved efficiencies to be gained and new customers attracted by making it easy for them to do business with you. Many times, technology is a key enabler to making it easy for your customers to interact and transact business with you.  If you can’t readily adopt these new technologies, you may lose customers who are better prepared to transact business with your customers.
  • Existing software and/or underlying infrastructure is no longer supported by the associated vendors – as there have been massive amounts of acquisitions in the ERP market over the years, there are lots of ERP solutions which were thought of as “flagship” solutions that are no longer receiving an adequate level of investment to keep existing customers satisfied and to attract new ones. Your vendor may have “dropped support” for your software without formally announcing it to you.
  • Can’t keep up with business demands by writing custom software vs. using packaged software solutions – for those who continue to write their own custom software, there are so many “commodity” processes that could be enabled via packaged software while still gaining the benefits of customized software in those “competitive advantage” processes – those processes that enable a company to gain competitive advantage in its marketplace. Unfortunately, most companies who have a “build” vs. “buy” approach to software do so across all business processes, and either pay a lot for “commodity” processes or can’t get resources focused on the “competitive advantage” processes due to keeping day-to-day operations running.  Don’t allow yourself to be held hostage by your internal application development team.

While the above is not intended to be an all inclusive list, these symptoms are very common in businesses.  As symptoms continue to pop up and their results become increasingly more disconcerting, manufacturing and distribution businesses will opt to evaluate and implement new ERP software solutions to remove these barriers to future business growth.

ERP Selection and TGI’s No Maintenance Fee Increase Guarantee

Thursday, April 15th, 2010 by Alex Smith

In addition to functional requirements, there are a number of cost-related questions to ask potential software vendors during the ERP selection process, such as:

1. What is the cost of software licenses? Are software licenses sold on a named user or concurrent user basis?
2. What is your average implementation services-to-software cost ratio?
3. Is the software sold on a module-by-module basis, or is it sold as an all-inclusive ERP software product?

A few important questions that are often missed or overlooked during the ERP selection process, however, are:

4. When do you start to charge new customers for annual maintenance?
5. What is your annual maintenance fee, and how is this maintenance fee calculated?
6. What was your annual maintenance fee five years ago?
7. Are software upgrades and future software releases included in your annual maintenance fee?

Questions 4-7 are crucial to the selection process because they can serve as a basis for the selection team to determine not only the most cost-effective short-term ERP solution but the most cost-effective long-term ERP software solution as well. The selection team must have a reasonable understanding of the future costs associated with purchasing the ERP product for the years following ERP implementation.

At TGI, we offer one year of free ERP maintenance from the date of software installation. Given that an ERP implementation may take between three and nine months to complete, we believe our customers should not have to pay maintenance on a software product when they are not using the software in a live transaction environment.

Perhaps more importantly, TGI provides a No Maintenance Fee Increase Guarantee.  We guarantee, in contract writing, that we will never increase the annual maintenance fees charged to each of our customers. This guarantee is designed to provide our customers with a consistent, expected yearly software maintenance expenditure that is free from unanticipated increased fees associated with their software maintenance agreement. We are very proud of the fact that we have never increased our customers’ annual maintenance fees since TGI was founded in 1990.

Why is this guarantee important?

Referring to questions 5 and 6 above, should there be a difference in the maintenance fees an ERP vendor charges its customer today versus five years ago, and the vendor does not provide price protection on their software maintenance agreement, a manufacturing or distribution organization may be subject to escalated software maintenance fees over time. The end result of these unexpected maintenance fee increases could mean that the organization will be forced to allocate funds to their annual software budget that would have otherwise been used for investment in other potential business endeavors.

At TGI, we believe increasing our customers’ annual maintenance fees over time is not the right way to establish long-term partnerships with our customers. As such, we have not and will not increase the maintenance fees we charge our customers over any period of time. Guaranteed.

For a complete listing of questions to ask potential ERP vendors, click here to download TGI’s “50 Questions for Every ERP Software Suppler” white paper.

Using Enterprise 21 ERP’s Integrated Training System to Train New Employees

Tuesday, March 30th, 2010 by Alex Smith

Virtually every business with whom we speak during the ERP selection process asks about Enterprise 21’s help files and how end-user training is conducted as part ERP implementation. The Enterprise 21 ERP system features help files built directly into the application, as well as an online users manual. These help files exist at the screen level and at the individual field level. In addition, when manufacturers or distributors purchase the Enterprise 21 ERP system, they receive the complete application source code at no additional cost. This enables end users (with the appropriate security permissions) to modify Enterprise 21’s existing help files to meet the specific needs of their organization.

In terms of functional training, TGI conducts end-user training onsite at the customer facility and provides online, Internet-based training throughout the ERP implementation process. In addition, the Enterprise 21 ERP system features an “Integrated Training System.” This system, which is built into Enterprise 21, serves as the foundation for initial end-user training and features answers to hundreds of frequently asked questions, training courses and certification exams, and “How-To” help. The Integrated Training System also includes a series of multimedia demonstrations that show end-users how to perform hundreds of different functions and process various transactions within Enterprise 21.

Perhaps one of the most important benefits of Enterprise 21’s Integrated Training System, however, is that it can be used to train new employees in the months and years following ERP implementation. Often times, new employees are trained by existing members of the organization who were previously trained by TGI personnel during implementation. A person who is added to the organization’s customer service department, for example, would more than likely be trained by one of the company’s existing customer service representatives. The problem with this approach is that it can lead to a declining level of ERP system knowledge throughout the organization over time as employees are added.  Using Enterprise 21’s Integrated Training System to begin training new employees ensures that each Enterprise 21 user receives the same, base level of functional training regardless of whether they have been with the organization for two years or two days. New employees can then take the organization’s certification exams to determine whether or not they are ready to begin processing transactions in a live production instance of Enterprise 21.

ERP Software Evaluation: What Customers Want from ERP Software and What ERP Vendors Want

Tuesday, March 9th, 2010 by admin

Let’s examine what most customers want from new ERP software and what most ERP vendors want from an ERP selection and implementation.  While there are many layers to the topic of what customers want from new ERP software, the core answer of what businesses want from new ERP software is business results – business owners want to reduce costs, increase revenue, improve operational efficiencies, and make it easier for their customers to do business with them.

Beyond business results, companies also want the following from new ERP software:

  • Efficient software evaluation leading to a successful result – companies want to make excellent decisions in the most efficient manner possible (unfortunately, when businesses aren’t aware of how this process should work, it rapidly becomes very inefficient).
  • Efficient, successful implementation – companies want their new software to deliver the functionality they expect and for the implementation process to be delivered on-time, on-budget, and on-scope.
  • Good long-term customer/vendor relationship (“win-win”) – companies want to be able to work with their ERP vendor, have continuity of the software vendor’s business, continuity of relationships with personnel at that business, and be able to understand how best to utilize their software and to resolve issues as they arise.
  • Ability to grow with the solution – companies want a solution that will last them for an extended period of time, in many cases this is 10-15 years or more.  To be able to do this, the software must be flexible, robust, and have sufficient functionality to be able to be leveraged as the customer’s business continues to grow and evolve.

So, what do ERP vendors want?  Probably not surprising, they likewise want business results.

Additionally, ERP vendors also want the same things the customers want:

  • Efficient software evaluation leading to a successful result – while ERP vendors would love to bat 1.000 by winning every deal they touch, they know that’s not practical.  They want to compete in deals in an efficient manner where they can compete on a level playing field, can win, and it is worthwhile to win.
  • Efficient, successful implementation – vendors want their customers to receive the business benefits they desire from their software and want the implementations to be delivered on-time, on-budget, and on-scope.
  • Good long-term customer/vendor relationship (“win-win”) – vendors want to work with customers who are easy and fair to work with, have continuity of the customer’s business, continuity of relationships of personnel, and are able to understand and internalize how best to use the software they’ve acquired.
  • Ability to grow with the solution – vendors want customers to continue to leverage more and more of their software’s capabilities over time.

While said somewhat under the covers above, I’ll also explicitly state the following which ERP vendors also want:

  • Efficient sales cycles (winnable deals, no “tire kickers”) – again, vendors want to focus their time on evaluations where decisions will be made and customers will move forward.  There is no time to be spent with perennial prospects that go through the same evaluation once a year and never decide to move forward to do anything. Additionally, vendors don’t want to be in a position where a potential new customer has orally committed they are going to move forward with the vendor only to take an inordinate amount of time to make the final commitment and sign contracts.
  • Happy, referencable customers – there is nothing better from a vendor’s perspective than having happy customers who are willing and able to act as references on their behalf.

You’ll note that to this point in time I’ve mentioned these things apply to most customers and most ERP software vendors.  That is because there are still people, including those who set the cultural tones of their businesses, who believe the only way for them to “win” is if the other party with whom they’re working is to “lose.”  This “win-lose” mentality unfortunately still exists frequently in the customer/ERP vendor intersection.

Speaking from an ERP software vendor’s perspective, when it is determined that a potential customer is focused on establishing a “win-lose” relationship, we walk away from those deals as rapidly as possible.  Likewise, if potential customers determine that an ERP vendor is attempting to establish a “win-lose” relationship, those customers need to eliminate that vendor from further consideration as rapidly as possible.

The most prevalent situation in which ERP vendors attempt to establish a “win-lose” relationship is where the functional and cultural fit between the vendor and potential customer is low, and the vendor is so hungry for new sales (i.e., business results are far more important than any of the other desires) that they continue to press on to close the sale.  In doing so, the ERP vendor knows the implementation is going to hit the rocks, but their objective is to get the customer so deeply invested in the project (both time and money) that they cannot turn back.

Those who are unfamiliar with how to structure and perform an ERP Software Evaluation are most highly susceptible to be bitten by a vendor attempting a “win-lose” transaction.  In cases in which the company is unfamiliar and inexperienced in orchestrating a software evaluation on its own, those companies are highly encouraged to find and engage experienced, independent assistance to help with the evaluation.

Here again I want to stress that the most critical word in this statement is “independent.”  There are tons of individuals and businesses that tout themselves as independent.  However, they may be software resellers in a consultant’s clothing or have biases to specific products because they have established implementation practices built around those solutions.

If, for whatever reason, hiring an independent consultant is not feasible, companies are encouraged to adopt a structured, analytical process they can follow on their own.  To help companies establish and manage a structured, analytical evaluation process, TGI offers free software selection tools via our Web site for the do-it-yourself software evaluation.

In closing, through this point in time, I’ve had the opportunity to work with well over 2,000 end companies and roughly 200+ independent consultants in ERP software evaluations since Q4/2003. During that time, I’ve seen some firms and individuals who were very good at performing their roles in their respective evaluation processes, while others were at best ill-prepared. In the end, when participants in the process are unable to successfully play their positions – whether intentional or unintentional – nobody wins.

In an effort to draw upon these experiences to help the various stakeholders of the process learn from these activities, I wanted to summarize those situations into a single statement. In doing so, I was drawn to a famous quote by noted Swiss Psychiatrist and founder of analytical psychology, Carl G. Jung, who said, “The world will ask you who you are, and if you do not know, the world will tell you.”

Here is what I call “Litzenberg’s ERP Software Corollary to Carl Jung’s Statement”…

“The world will ask you what you want in new ERP software, and if you do not know, you’ll likely be sold something you don’t really want, can’t really use, will spend a lot of time, effort, and money trying to get it to do something it was never intended to do, and ultimately, won’t achieve the desired results.”

ERP Selection: The Importance of a Quantitative ERP Software Selection Process

Tuesday, February 2nd, 2010 by Alex Smith

The ERP selection process is one of the most important activities in which an organization engages. Selecting an ERP system represents a technological and business process transformation for the organization; therefore, it is imperative that the organization conduct a thorough, quantitative analysis of various ERP software companies and solutions. In doing so, the business’s software selection team can gain a true “apples to apples” comparison of each software solution and determine which solution offers the best functional fit for the organization.

To help manufacturers and distributors in this process, TGI’s Software Selection Tool Kit offers, among other resources, software demonstration script templates and grading sheets to be used for onsite ERP software demonstrations. The selection team can use these templates to develop a software demonstration script that reflects the key software requirements of the organization. The selection team would then distribute these scripts to a select group (usually 2 or 3) of vendors with sample data (products, parts, ingredients, vendors, customers, etc.). The software vendors, in turn, would use the supplied sample data to follow the demonstration script prepared by the selection team. Using the software demonstration grading sheets contained in TGI’s Software Selection Tool Kit, the selection team can score how each vendor performed for each task in the demonstration script. Following the final onsite software demonstration, the selection team can compile scores for each ERP software vendor and see, quantitatively, how each software solution compared to the other demonstrated software solutions. The end result of this process will be a software vendor and solution that outscored and outperformed the other software solutions that were demonstrated.

By requiring software vendors to follow a demonstration script that reflects the organization’s key software requirements, the selection team will be able to see first hand how each vendor can meet those requirements. This process also prevents the software vendor from shying away from a specific software requirement that it knows it won’t be able to meet and ensures that each software vendor was evaluated in a consistent manner.

To download TGI’s onsite software demonstration templates and grading sheets, please click here.

The ERP Selection Process: 50 Questions for Every ERP Software Supplier

Wednesday, January 13th, 2010 by Alex Smith

We recently added a new white paper to the TGI Resources Library, 50 Questions for Every ERP Software Supplier. This white paper lists 50 questions that are critical to a successful ERP selection project and must be asked of every potential ERP vendor. While there are some basic, general questions about product functionality, the white paper is not intended to be a list of questions relating exclusively to functional features; rather, the questions are designed to give the selection team a better feel for the software vendor’s general business philosophies, organizational longevity, approach to ERP implementation and customer support, annual maintenance fees, software upgrades, etc. One can think of the white paper as a “Getting to Know You” list of questions to ask ERP vendors. To download the 50 Questions for Every ERP Software Supplier white paper from the TGI Resources Library, please click here.

Visit the New TGI Resources Library for Enterprise 21 Demonstrations, Software Selection Tools, and more

Monday, November 9th, 2009 by Alex Smith

We recently released the TGI Resources Library. Aside from being able to access Enterprise 21 ERP software demonstrations and view past TGI webinars, one of the most useful aspects of the TGI Resources Library is that it gives site visitors immediate access to all of TGI’s ERP selection resources, including the complete version of TGI’s Software Selection Tool Kit. The tool kit is designed to provide software selection teams with the necessary resources for conducting a thorough, well-structured ERP selection process with a comprehensive and quantitative analysis of various ERP vendors and solutions. From the SSTK Downloads page, site visitors can download any of TGI’s software selection resources individually or download the complete Software Selection Tool Kit as a single executable file. With the conclusion of 2009 rapidly approaching, manufacturing and distribution organizations who plan to select a new ERP system for implementation to begin in early 2010 can leverage TGI’s Software Selection Tool Kit as a guide for their software evaluation projects.

Implementing on a Time Crunch

Thursday, October 1st, 2009 by Alex Smith

With the beginning of 2009’s fourth quarter starting today, companies of all sizes find themselves in a hurry to complete their ERP software evaluation process, begin software implementation, and prepare their organizations for initial system go-live on the first Monday of 2010. ERP system implementation is a time consuming task for any organization. Implementation requires a coordinated effort on the part of both the software provider and the manufacturer’s or distributor’s implementation project team leaders. Given the sophisticated, complex nature of ERP systems, there are two relatively easy ways in which an organization can implement a new ERP solution before the end of 2009 and be in a position to go-live January 2010.

Prepare your data. One of the most tedious, time consuming activities that occurs during the ERP implementation process is data migration. Companies need to have their data prepared in a computer-readable file format to import their data into their newly selected ERP system. Data accuracy and integrity is critical to the ERP solution’s performance both before and after production go-live. By having data such as GL accounts, customers, products, parts/ingredients, vendors, etc. prepared in a CSV file or other computer-readable format, companies can gain significant time and cost savings during the data migration process as opposed to manual data entry or other highly-inefficient migration processes.

Use the software as designed. Assuming the organization has made the right software selection as a result of their evaluation process, companies should spend little time worrying about miscellaneous modifications that are not critical to initial production go-live. If the organization has conducted a thorough software evaluation and performed a quantitative analysis of various software suppliers and solutions, its ultimate final software decision should have resulted in a software package that meets the vast majority of their business needs with standard, “out-of-the-box” functionality. If the selected software solution does not meet one of the organization’s critical software requirements, it probably wasn’t the right software solution in the first place. In regards to an expedited software implementation, companies should adopt a 90/10 rule, ensuring that 90% of the organization’s software requirements can be met with standard functionality, with the remaining 10% left to focus on minor, non-critical software requirements and enhancements in the first few months following go-live.

By preparing data for migration and using the software as designed, organizations should be ready for a swift implementation and go-live date in early January 2010.